Trump’s ‘Liberation Day’ will hasten China’s domination

President Donald Trump’s Liberation Day tariffs are falling hardest on the world’s smallest economies, a massive geostrategic mistake with little economic upside for the United States.   

Imagine yourself as the leader of Mauritius, a strategically located island nation in the Indian Ocean with 1.2 million people, now facing a 40% tariff. 

You would like to reach an agreement with the United States, but how do you get your call answered? Most of the world’s leaders are now jockeying to negotiate with US officials. 

“Our teams are talking to all the great trading partners today,” Secretary of Commerce Howard Lutnick said recently.

Your country’s total trade surplus with the US in 2024 was US$186.5 million, about the cost of Trump’s inauguration. The phone lines could be busy for a while. 

Worse yet, it is impossible to know what policies you should change. Mauritius was not even included in the US Trade Representative’s latest “National Trade Estimate” report, which catalogues trade barriers and was released on March 31. 

American suppliers

Your staff consults the Commerce Department’s website for doing business in Mauritius. The website explains: “There is no known tariff or non-tariff discrimination against US companies.” 

What then is the art for a deal? 

Your main imports from the United States are fuel and oil. Perhaps you purchase a bit more from American suppliers. Your main exports to the United States are diamonds and seafood. Your mineral deposits are staying put, and your fish will not swim north. 

Can you buckle down and weather the storm? After all, retaliating by raising tariffs would only increase the harm.

Even as an upper-middle-income economy, your ability to cushion the blow by using consumption subsidies and other forms of stimulus is limited.  

So, who do you call for help? Many will turn to China. 

It is already the largest trading partner for more than 120 countries, including Mauritius, which signed a free trade agreement with China in 2019. 

Irresponsible lending

Across much of the world, no one is better positioned to offer a hand.  

But help will not come freely. Like Trump, Chinese officials prefer to negotiate bilaterally so they can exploit asymmetries in size. 

Their wish list will depend on the target, but past requests have included access to raw materials, political support at international fora, and deals to build, operate, or access dual-use infrastructure.  

This game is not new. US officials from both parties have spent years warning about the vulnerabilities that irresponsible lending has created along China’s Belt and Road. 

But Trump’s tariffs are now exacerbating those preexisting conditions, and perversely, setting up China to play the hero.  

Indeed, the Pentagon is likely watching those developments with concern. 

Mauritius is set to take control of Diego Garcia, home to a US-UK military base. Despite warnings about the island nation’s ties with China, Trump signed off on the handover just weeks ago.  

The whiplash stings. Last December, the US Congress nearly renewed the African Growth and Opportunity Act, a long-standing bipartisan deal to provide Mauritius and other eligible countries in sub-Saharan Africa with duty-free access to American markets. 

 Geopolitical costs

Trump is levying reciprocal tariffs in the name of protecting US national security.  

Going forward, US officials must take greater care to minimize the geopolitical costs of these measures, which disproportionately impact small economies. Otherwise, one of the legacies of “Liberation Day” will be China’s consolidated influence across much of the world. 

Jonathan E Hillman is a senior fellow for geoeconomics at the Council on Foreign Relations.

This edited article was published by the Council on Foreign Relations under a Creative Commons license. Read the original here. 

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy of China Factor.